hankyoreh

Gyeonggi Province

A manufacturer of water purifiers in the Geumcheon district of Seoul, identified only as Company G, recently slashed 20 jobs from its payroll. Instead, the company hires irregular workers on a part-time basis from an outsourcing firm whenever extra workers are needed.

“I have no option but to reduce the number of workers because I’ve been hit by falling sales and rising raw materials prices and there has been little change in supply prices,” the owner of the manufacturing company, who is only identified by the surname Yoon, said. “Irregular workers are each paid some one million won (US$704) per month and it is not necessary to pay for four (mandatory) insurance products,” as would be required if Yoon were to hire regular workers.

The 45-year-old head of a local branch of a securities company, who is only identified by the surname Choi, is having sleepless nights these days. “Talk of ‘Fear of J (joblessness)’ is spreading among people involved in the financial industry. Whenever I meet the heads of our other branches, the main topic of discussion is about what people are going to do if they get fired.”

Fears of restructuring and job loss are haunting low- and middle-income earners, who have already been battling with a plunge in stock prices, a decline in apartment prices and a rise in interest rates for their loans.

With private consumption frozen and exports losing steam, small- and medium-sized companies and self-employed people are teetering on the edge. Construction firms are expected to cut their workforce and it is predicted that the financial industry, which has taken the hardest hit from the financial turmoil at home and overseas, will follow suit. By the end of this year, a number of industries are likely to undertake large-scale workforce restructuring projects.

Most vulnerable are the self-employed and people who work at small- and medium-sized companies. On the afternoon of October 29, there were a number of vacant rooms in the commercial buildings situated near a subway station in Bundang, Gyeonggi Province. There were four restaurants and one Internet cafe on the second floor of one building in the area, but now, only one restaurant, identified only as Restaurant N, remains. A person related to the restaurant said, “All of them shut their shops down because of bad business. Each restaurant hired about five employees, two in kitchen and three servers, but they all lost their jobs.”

As the market for new homes is quickly beginning to freeze, smaller construction companies are cutting their workforces in half or slashing wages by more than 20 percent. The 53-year-old owner of a civil engineering firm in Bundang, who is only identified by the surname Oh, recently reduced his workforce from 36 to 20. “I told them I would hire them again when we get more orders, but things are likely to get worse next year,” Oh sighed.

Large-scale construction companies are feeling the heat, too. Executives at some of the major construction firms are already under pressure to resign. After the government announced a series of measures to support the construction industry on October 21, 27 of the top 100 construction companies will go through restructuring plans in the next year, which is expected to have a large effect on subcontractors.

Fears of job cuts are also weighing on the financial industry, which has enjoyed a great deal of success over the past several years. A 36-year-old sales worker at a securities company, who is only identified by the surname Kim, said, “I believe there will soon be job cuts in the securities industry, and I think I will probably be on that list.” On October 29, the state-run Korea Securities Depositary said it will dump 20 jobs by the end of this year to trim the organization down.

Banks are not immune from the employment uncertainties because most of them are likely to see a sharp decline in profits this year and can probably expect their earnings to decline next year as well. An executive at a local bank said, “Over the past several years, most executives have stayed at their jobs because the banks have continued to bring in profits. However, many of them are likely to be sacked by the end of this year when they renew their employment contracts.”

On October 17, SC First Bank said it was expecting to receive applications for voluntary retirement from some 170 employees. When SC First Bank claimed its voluntary retirement plan was a way to strengthen operations, the bank’s union protested, saying the plan was a signal the bank would be downsizing.

Big manufacturers are also out of the safety zone. Almost all industries, including automobile, electronics and steel, are struggling with the global economic downturn and reducing output, fanning fears of job cuts.

Kwon Soon-woo, head of the macroeconomics research division at Samsung Economic Research Institute, said, “Next year, both exports and domestic consumption are likely to go into a downturn. As a result, an increase in the jobless rate is unavoidable. But the government needs to present an economic stimulus package and support the most vulnerable sectors to minimize the fallout.”

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